Ontario’s shell game hides green costs

Borrowing billions to pay billions for green power

By Tom Adams, Financial Post

Dwight Duncan, now Ontario’s Finance Minister, told the legislature in 2004: “It would be irresponsible for the province and taxpayers to continue to subsidize electricity consumption, because it jeopardizes our ability to invest in health care and education. This is simply not sustainable, nor is it acceptable. The people of this province deserve better.” He committed to “take the politics and politicians out of electricity pricing.”

Where is the Dwight Duncan of 2004?

Then, with the deficit at $5.6-billion, he said it was unacceptable for taxpayers to shoulder a portion of the cost of electricity.

Today, with the deficit at $18.7-billion, he engineers techniques to split the bill for the McGuinty government’s careless, profligate electricity policies between staggering power rate increases today and enduring pain for tomorrow’s taxpayers.

Duncan’s new electricity plans are riddled with contradictions. He claims that the government’s new long-term electricity plan will lead to “stable and predictable pricing.” Yet, in his own statement, he admits that: “Over the next five years, however, residential electricity prices are expected to rise by 46%, which is an average annual rate of about 7.9%.”

When McGuinty’s government introduced its Green Energy Act last year, enshrining sole-sourcing of power contracts in law, it promised that the rate impact would be limited to 1% per year. Then energy minister George Smitherman told the Toronto Star: “I have been very clear about it. One per cent per year, incremental of a person’s electricity bill, with corresponding capability through investments in conservation for people to lessen their use of electricity.”

One glimmer of truthfulness in the Economic Statement is the admission that renewable power generation is the main driver for the rate increases. This admission contradicts the recent surge of denials from government and renewable energy apologists. Ontario’s Environmental Commissioner, Gordon Miller, for example, has been on a speaking tour pleading with electricity executives to convince consumers that rates are stable.

Applying the government’s estimates, by 2015 the cost of sole-sourced green energy contracts above the market value of the power will exceed $4-billion per year.

Slavishly, Duncan cleaves to Premier McGuinty’s propaganda slogan that the “Green Energy Act will create 50,000 new jobs in three years.” The employment losses galloping electricity cost increases have and will cause are ignored.

Duncan’s retreat from truth and principle grows with his explanation for how the public will pay for his blatant vote-buying scheme. Next year, the government claims the “benefit” will cost $1.1-billion. Until this corrosive shell game is killed, the taxpayer hit will follow skyrocketing electricity costs.

Notwithstanding record deficits, the cost can be accommodated due to what Duncan calls the McGuinty government’s record of “prudent management of finances.” Duncan claims that provincial income from Crown-owned Ontario Power Generation (OPG) and Hydro One are projected to match the cost of the rebate. Duncan ignores previous decisions pledging all of OPG’s and Hydro One’s profits to servicing debts left by the former Ontario Hydro. Shifting funds from servicing Ontario Hydro debts to paying for rebates would only work if Duncan could magically spend dollars twice.

With little hope that even very aggressive actions by a new government and an economic rebound better than any current forecasts can get the Ontario government out of deficit any time over the next five years, all of the costs for the “benefit” plan will be borrowed, to be repaid in the distant future.

McGuinty’s Green Energy Act, passed last year, erased more than a century of electricity policy consensus based on the idea that the purpose of the power system, irrespective of policy instruments used, was to serve consumers. Now the purpose of the power system is to achieve green economic and social transformation.

Duncan’s Economic Statement breaks from our traditions more profoundly. Historically, a fairly solid wall separated electricity sector financial flows from provincial governmental finances. This compartmentalization provided some tenuous measure of transparency, accountability and independence for the power system from political meddling. Now the financial flows of the electricity system are deeply embedded in the government’s daily financial life.

McGuinty claimed his electricity policies, enshrined in the Green Energy Act, would benefit future generations. Although our bills are skyrocketing, Duncan has signed an additional blank cheque payable by our kids to fund irresponsible green initiatives. Duncan has polluted the power system with unprecedented political meddling and created a whole new class of taxpayer liability.

Tom Adams is a Toronto-based energy consultant.

10 thoughts on “Ontario’s shell game hides green costs

  1. “Duncan ignores previous decisions pledging all of OPG’s and Hydro One’s profits to servicing debts left by the former Ontario Hydro. Shifting funds from servicing Ontario Hydro debts to paying for rebates would only work if Duncan could magically spend dollars twice.”

    Stand tall, place one finger on your beanie, clap your heels together three times, and all will be well!

    Yeah, right.

    The announcements expected later today will also feature magicians and other wizards from our provincial Fiberal party.

    I wonder how many manure spreaders it will take to cart away all of their crap afterwards. I hope they leave enough room so all of them can jump onboard too!

  2. “Applying the government’s estimates, by 2015 the cost of sole-sourced green energy contracts above the market value of the power will exceed $4-billion per year.”

    Which is in agreement with statements I made previously in this blog that the costs would exceed $50B. — However, I think that even this figure will prove to be low.

    As I pointed out previously in another post, manufacturers typically use the two times table to determine their price to the wholesale market. So, any power used for manufacturing is likely to cause a significant increase in any products which use significant energy in their manufacturing processes — steel, other metal refining, machining processes, chemical manufacturing, bag manufacturing etc. Expect to see another exodus or shutdown of heavy energy users.

    Farming is a heavy energy user as well. Returning to the use of Percherons for heavy draft work will not be viewed as an option. Pick-your-own operations will likely be pointless as well due to rising fuel costs. The aim of the Holderites and the Sons of Ehrlich is to de-develop the planet. The Liberals (Federal and Provincial) as disciples and acolytes of the new green religion are well on their way to speeding the advent of “rapture”.

    Designing websites and other service based business will not replace manufacturing.

  3. Worry not All:

    We will have “A RELIABLE, GREEN AND SUSTAINABLE” electricity system!

    Sorry, I just got a whiff of that “green” weed the Liberals are OD-ing on!

    We’re screwed!

    B.B.W.

  4. Our political system has been broken by the Ontario Liberals….Anarchy and Gridlock is starting to look better all the time…

    I don’t remember Dalton and the Liberals running on the platform that they would spend $25 Billion for a program that would generate ZERO new hydro, increase our energy costs by a permanent 65% increase over a 6 year period and enslave future generations to their legacy of debt, destroy farmland and personal property, destroy citizens health and parts of the eco-system with this unmoral, undemocratic, lunatic Green Energy Act…..

    All that I remember that he campaigned on was some stupid policy that would not separate more funding for religious schools…

    How did we get here ? We need more direct democracy in the future to thwart these despots as well as recall provisions…

  5. Would like to see this article re-printed in the Windsor Star, Duncan’s riding

  6. So why did natural gas prices increase by %10.6 when there is said to be more than ample supplies of natural gas? Just because they could get away with this as Hydro bills were increased and people would expect gas prices to also increase?

  7. This 10% rebate is the BIGGEST crock!!!!!

    Ok, we introduced HST of 8% to hydro. Whoops, now there is a huge backlash. So, let’s rebate 10% of your hydro bill with money we have to borrow and pay interest on……..

    This is basic sh** here!

  8. Barbara…

    Natural gas prices are possibly going up to feed the major increase in demand as a result of all that new natural gas generation Dummy McGoofy and his band of green weed smokin idiots installed.

    The actual numbers appear hard to find but I’m guessing these things are sucking back about 25% or more of the entire provinces gas consumption from all sectors.

    Oh, BTW. The 1100 MW of wind generation installed in Ontario is producing 1118MW of power! At the same time Ontario is EXPORTING 1962MW for which we are currently getting 0 (ZERO) cents per MW! 15:58, Nov 23, 2010 (http://www.ieso.ca/). I wonder who is benefitting from all that wind energy?

    There will probably be a big news release from CanWEA about it real soon. It will have to be today because the wind is supposed to drop off to more normal levels tomorrow!

    And another slap in our already reddened faces is a nice link to the CanWEA website from the IESO website!

    So much for “independent” eh?

    Lovely isn’t it!?

    B.B.W.

  9. Ontario has embarked on a path that is going to cost the tax payers a huge amount of dollars. Wind and solar are not acceptable power supplies. The government has been blinded by green environmental delusions. Nuclear reactors are the only logical solution. Too bad special interest groups worm their way in and mess things up. Shame on the tree huggers

  10. Wait a minute Gary! I’M A TREE HUGGER!

    How do you think you measure the damn things to find out how much LUMBER is in them? 🙂

    B.B.W.

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